RAPAPORT… Alrosa has raised its production plan for this year amid buoyant rough demand and a tight supply situation.
The miner will recover around 32.5 million carats in 2021, compared with a previous outlook of 31.5 million carats, it said Thursday in its quarterly earnings report. The increase had been under consideration since earlier this year, as rough sales have soared and inventories have slumped.
Diamond miners were initially able to meet the strong demand by selling goods they had amassed in 2019 and 2020, explained Alrosa chief financial officer Alexey Philippovskiy.
“By the start of [the third quarter of 2021], producers had run out of their stocks and began supplying ‘freshly’ produced diamonds,” he noted. In the coming years, however, global production will be around 20% to 25% below pre-pandemic levels, he cautioned.
Alrosa’s revenues jumped 56% year on year to RUB 75.66 billion ($1.06 billion) in the third quarter, reflecting the market rebound, even as shortages limited the company’s ability to sell. Net profit more than tripled to RUB 24.98 billion ($351.2 million) versus RUB 7.58 billion ($106.5 million) a year earlier.
Image: Rough diamonds and a loupe. (Alrosa)
Alrosa Ups Production Outlook in Strong Market
The Bottom Line
- Alrosa increased its 2021 production target to 32.5 million carats from 31.5 million carats due to strong rough diamond demand and low inventories.
- The company noted that producers exhausted stockpiles by Q3 2021 and shifted to supplying newly mined diamonds.
- Alrosa's Q3 revenues rose 56% year-over-year to $1.06 billion, with net profit tripling to $351.2 million despite supply constraints.
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